The Law offices of Arnold & Smith - John Price Carr House
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Alternative to Bankruptcy

When faced with debt, many people are leery about filing for bankruptcy. The concern is reasonable: bankruptcy could have a negative effect on credit scores and could also hamper a debtor’s ability to get loans for necessary things such as a house or an automobile. As such, many people who face debt look for alternatives to bankruptcy.

People who have debt problems often have to endure lawsuits, creditor phone calls, foreclosure, or other harassment that stems from either nonpayment of those debts or simply the amount of those debts. Generally speaking, anyone who carries debt should consider resolving their debt problems as soon as possible, and when broken down there are only three feasible options: bankruptcy, paying your debts, and ignoring your debts. It really is no more complicated than that.

Bankruptcy. The bankruptcy option is often the most affordable and quickest solution to a person’s debt issues. Whether a debtor files a chapter 7 or a chapter 13 bankruptcy, both offer an opportunity for the debtor to quickly remove large amounts of debt from their shoulders with either small or no payments whatsoever.

Paying your debts. When somebody is opposed to filing bankruptcy, they have to recognize that their debts will still be their cross to bear. Oftentimes a debtor or their attorney can help negotiate those debts with the creditor with the hope of negotiating a solution. Typically, we can help the debtor negotiate a debt settlement with the creditor to avoid bankruptcy and that settlement normally comes in two varieties: a one-time lump sum payment or a payment plan. In the past when we have negotiated on behalf of the client, we have found that creditors will be willing to give a much larger discount off the debt if the debtor is agreeable to a lump sum payment. It is impossible to forecast what type of discount the creditor will be willing to extend, because every creditor is different. What is nearly certain, however, is that the discount is larger for lump sum payments than elongated payment plans. In a payment plan, the debtor agrees to pay off his or her debt over a long period time (often years) while the creditor agrees not to initiate lawsuits or continue making creditor phone calls. For clients looking to avoid bankruptcy and who have the means to pay for these debts, a structured payment plan or negotiated lump sum payment may be the best alternative.

Ignoring your debts. While ignoring your debt issues can be an option, it does not necessarily mean it is the best option. Some people who face debt recognize that they have little if any property that would be subject to levy after a lawsuit. They also prefer to endure and more often ignore constant phone calls and\or lawsuits. If a creditor should get a judgment against a debtor in North Carolina that judgment will exist for 10 if not 20 years. Thus, the concern with clients that ignore debts, (because they are not concerned about losing property) is that their circumstances will eventually change during that time. While they may not have a concern at the present time, who knows what the future may hold? But it is indisputable, that for some people, ignoring your debts is a feasible alternative to bankruptcy.

We have extensive experience assisting clients in bankruptcy, negotiating debts, or even advising those people who have the burden of creditor harassment or are facing lawsuits. Those experienced attorneys at Arnold & Smith, PLLC can guide you through the process and provide you all the information that you will need in order to make the decision that is best for you and your family. If you would like one of those experienced attorneys to assist you, we invite you to contact us. The burden of debt is a serious issue that affects many aspects of life, most importantly the quality of your life. Something needs to be done to help and we are more than happy to provide that for our clients.